- The Washington Times - Wednesday, December 25, 2002

The Treasury Department asked key members of Congress yesterday to increase the government's borrowing authority, warning that it may hit the current limit on the federal debt by late February.
Without an increase in its ability to borrow, the government runs the risk of defaulting on the national debt. The debt limit now stands at $6.4 trillion.
"Due to the ongoing response to the September 11, 2001, terrorist attack and the economic slowdown, which began in the summer of 2000, the administration now projects that debt subject to limit may reach the statutory ceiling in the latter half of February 2003," Deputy Treasury Secretary Kenneth Dam wrote in a letter yesterday to House Speaker J. Dennis Hastert, Illinois Republican.
A copy of the letter also went to incoming Senate Majority Leader Bill Frist, Tennessee Republican, as well as key members of House and Senate budget, tax and finance committees.
Treasury didn't say how much of an increase in the debt limit it wanted from Congress.
Congress in June boosted the debt limit by $450 billion, from $5.95 trillion to the current $6.4 trillion. However, at that time, Treasury had sought a larger increase and warned that Congress would need to increase the government's borrowing authority again.
Brian Roseboro, Treasury's assistant secretary of financial markets, said that June increase would have provided the government with enough money to pay its bills until December at worst or until June 2003 at best.
If Congress doesn't boost the government's borrowing authority, Treasury can juggle funds to dodge a default on the national debt, Mr. Roseboro said. Treasury twice this year has moved around billions of dollars to do just that.
Boosting the debt limit is more a matter of politics than economics.
Economists and others are confident that Congress eventually will raise the limit. A federal default is considered unimaginable because it would rattle the bond markets, force interest rates higher, weaken the world economy and deliver a jarring political blow to President Bush.
"I am writing to request that Congress act promptly next year to ensure the government's ability to finance its operations," Mr. Dam wrote. "This action is necessary to ensure success in our efforts to combat terrorism, continue the economic recovery and create jobs, and maintain the soundness of federal government securities."
Mr. Roseboro said Treasury stands ready to work with Congress to resolve the matter.
National debt subject to the $6.4 trillion limit now stands at $6.3 trillion.
In the last congressional battle over raising the debt limit, Democrats said the increase underscored how the 10-year, $1.35 trillion tax cut Mr. Bush engineered last year forced the government back into the red. The 2002 budget deficit of $157.7 billion ended four straight years of surpluses.
Republicans blamed last year's recession and the costs of fighting terrorism for the need to extend the debt limit.
Democrats seized upon Treasury's latest comments on the debt ceiling to ridicule Mr. Bush's tax cuts and his handling of the struggling economy.
"The Bush administration's Christmas present to taxpayers is a request to raise the nation's debt ceiling. This is one of those gifts that will keep on giving," said Sen. Kent Conrad, North Dakota Democrat.
"By raising the debt ceiling to pay for the president's tax cuts and his other spending, the Bush administration is wanting our children and grandchildren to pay our bills."
Outgoing Senate Majority Leader Tom Daschle, South Dakota Democrat, said of the administration: "They need to get serious and get a new economic plan now."

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